Mahindra & Mahindra Ltd. will acquire a 51-percent stake in Peugeot Motorcycles as it bids to expand its motorcycle business by gaining access to European technologies. Peugeot Motorcycles is the scooter unit of PSA/Peugeot-Citroen.
The deal is part of a plan by PSA chief executive Carlos Tavares to stop the carmaker’s financial bleeding and start making profits. Selling the stake to Mahindra will lessen PSA’s exposure to Peugeot Motorcyles, which has posted losses for a decade while failing to keep up with Italian scooter maker Piaggio.
Mahindra Two Wheelers Ltd. plans to inject EUR15 million ($18.9 million) into Peugeot Motorcycles, Mahindra said in a stock exchange filing. The stake buy in Peugeot Motorcycles should allow Mahindra to better compete with the current leaders in India’s fast-growing two-wheeler market -- Hero MotoCorp and Honda.
Mahindra would also be better positioned to penetrate a scooter market which sales jump 23 percent in the year ended March. Peugeot Motorcycles logged an 8-percent jump in scooter sales in 2013 to 79,000 unit.
It currently employs almost 500 workers in France and 300 more at a joint venture in China. Tavares told French radio RTL last month that the Peugeot Motorcycles was a drag on the group, adding that a solution to get rid of the liability.